Kwacha Expected to Strengthen as Tax Obligations Loom, Says Economist
Economist Emmanuel Zulu has projected that the Zambian kwacha will perform firmly this week as businesses and individuals scramble to meet their tax obligations.
The increased demand for the local currency is expected to provide temporary support, helping the kwacha gain strength against major currencies, particularly the US dollar.
Mr. Zulu explained that the upcoming tax deadlines are likely to drive demand for the kwacha, bolstering its value in the short term. “We might expect a bit of firmness from the kwacha this week as the need to settle tax obligations increases,” he said.
While the global oil market and other external factors continue to create economic challenges, Mr. Zulu noted that these issues are unlikely to impact the kwacha’s performance this week. However, he cautioned that the currency’s strength might be short-lived.
“By next week, we may see the kwacha lose traction,” Mr. Zulu warned. “There is a lot of pressure on the kwacha currently due to Zambia’s increased importation of commodities to cope with the ongoing drought situation. This has led to a higher demand for the US dollar, which is putting downward pressure on the kwacha.”
Despite these longer-term concerns, Mr. Zulu expects the kwacha to hold firm against the US dollar this week as the immediate need to meet tax payments takes precedence.
